TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 297
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....rned CIT(A) erred in not allowing the additional depreciation @ 20% u/s 32(1)(iia) of the Act on moulds and dies if treated as capital expenditure 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in affirming the action of Assessing Officer ('AO') by reducing the capital investment subsidy from the cost of the asset purchased for the purpose of computing depreciation under section 32 of the Act. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in affirming the action of AO of treating the excise duty refund of Rs 4,96,06,000 as revenue receipt instead of capital receipt. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in affirming the action of AO of disallowing an amount of Rs 4,10,154 under section 14A of the Act read with Rule 8D in respect of expenses incurred for earning exempt income. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the AO in disallowing the administrative expenses under section 14A of the Act read with Rule BD(iii) without establishing any nexus between ....
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....r dtd. 17/11/2015 CIT(A) has confirmed the addition /disallowance and dismissed the above grounds of appeal on merits, thus, transgressing the jurisdiction of the CIT(A) and stepping into the jurisdiction of the ITAT." 4. As common issues are involved in both the appeals, and these related to the same assessment order, but different orders of Ld. CIT(A), both are being decided by a common order. ITA No. 349/Mum/2016 5. Brief facts of the case are that the assessee filed its return declaring nil income on 21.11.2011, which was processed u/s 143(3) of the Act. Subsequently, the case was selected for scrutiny and notices u/s 143(2) and 142(1) were issued along with a questionnaire. After considering the submissions of the assessee, the assessment was completed at an income of Rs. 12,95,96,080/- after making various additions/disallowances. 6. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). The assessee's appeal was partly allowed by the Ld. CIT(A) vide order dated 17.11.2015. Subsequently, the assessee filed a rectification application before the Ld. CIT(A), in response to which, another order was passed by Ld. CIT(A) on 09.03.2016 giving fu....
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....ns in favour of the assessee: i. CIT v/s Malerkotla Steels & Alloys (2011) 336 ITR 49 (P&H) ii. CIT v/s TVS Motors Ltd. (2014) 364 ITR 1 (Madras) iii. CIT v/s Sunbeam Auto Ltd. (ITA No. 351/2012) (Delhi HC) In the case of CIT v/s Malerkotla Steels & Alloys (supra), it has been held that the cost of moulds used in the manufacturing process should be treated as a revenue expenditure since the life of moulds was short, requiring frequent replacement, and such an expenditure was incurred to facilitate main production process carried out by the assessee, and in no way could be construed as creating a new asset. Similarly, in the case of CIT v/s TVS Motors Ltd. (supra), it has been held that the dyes and moulds were not plant and machinery but were attachments made to plant and machinery to make it function as per the requirements of the business, and therefore, the deduction was allowable u/s 31 of the Act. Further, in the case of CIT v/s Sunbeam Auto Ltd. (supra), revenue's appeal was dismissed upholding the Tribunal's decision that dyes and moulds does not bring into existence any enduring and permanent advantage in the capital field and is allowable as a revenue expenditure.....
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....de to meet any portion of the actual cost as envisaged under Explanation 10 to section 43(1). He has placed reliance on the following decisions of the Hon'ble jurisdictional and other High Courts and of the coordinate benches: i. PCIT vs. Welspun Steel Ltd. [2019] 103 taxmann.com 436 (Bombay High Court) ii. Universal Cables Ltd. vs. DCIT [2015] 57 taxmann.com 95 (Kolkata Tribunal) iii. Alkoplus Producers Pvt. Ltd. vs. DCIT (ITA No. 1129/Pune/2016) (Pune Tribunal) iv. Sasisri Extractions Ltd. vs. ACIT [2010] 122 ITD 428 (Vishakhapatnam Tribunal) v. Capital Foods Exports P. Ltd. vs. ACIT [2012] 139 ITD 584 (Mumbai Tribunal) vi. ACIT vs. Godrej Agrovet (ITA No. 1629/Mum/09) (Mumbai Tribunal) 9.3 Ld. DR, on the other hand, has relied on the order of Ld. AO, and pointed out that after insertion of Explanation 10 to Section 43(1), the capital investment subsidy ought to be reduced from the cost of the assets (plant and machinery), and the judicial pronouncements prior to this insertion are no longer applicable. 9.4 We have heard the rival submissions and perused the material on record, along with judicial pronouncements. We have also perused the provisions of the scheme dat....
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.... are that in its computation of income, the assessee had claimed deduction of Rs. 4,96,06,000/- on account of refund of excise duty. After examining the requisite details, Ld. AO held that the assessee was not obliged to utilise the amount for a particular purpose. The assessee's production facilities had already been set up. He, therefore, held that the amount received is covered under the profits and gains of business and professions under the normal provisions of the law, and therefore, the same is taxable as business profits. Accordingly, the deduction claimed by the assessee in respect of excise duty refund was disallowed and added to its total income. 10.3 In the appellate order dated 17.11.2015, Ld. CIT(A) dismissed the assessee's appeal. Subsequently, vide rectification order dated 09.03.2016, Ld. CIT(A), after considering the submissions of the assessee in the light of the decision of the Hon'ble J&K High Court in the case Shri Balaji Alloys v/s CIT 33 ITR 335, wherein it has been held that the refund of excise duty is capital receipt, and therefore, not taxable, allowed the appeal of the assessee. He accordingly directed the Ld. AO to treat the refund of excise duty as a....
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....hand, has relied on the orders of lower authorities. 11.3 We have considered the rival submissions. We find that on the issue of disallowance u/s 14A in respect of dividend income, the assessee's claim that the same is subject to dividend distribution tax, and hence, no disallowance ought to be made is not tenable as the issue is covered by the decision of the Hon'ble Apex Court against the assessee in the case of Godrej and Boyce Manufacturing Company Ltd. v/s DCIT (2017) 394 ITR 449 (SC). 11.4 With regard to the assessee's contention that where no exempt income had been earned from the investments, no disallowance ought to have been made u/s 14A of the Act by the Ld. AO, we note that the issue is decided in favour of the assessee in numerous decisions of the coordinate benches. In case no exempt income has been earned during the year under consideration by the assessee, no disallowance could be made u/s 14A of the Act in the light of the judicial pronouncements on the issue. In view of the above, we deem it appropriate to restore the issue to the Ld. AO for the limited purpose of verification to ascertain whether any exempt income, including dividend income, has been earned by....
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....t is considered. After perusing the submissions of the Appellant and the order of CIT under section 263 of the Act for AY 2010-11 in Appellant's own case, it is observed that the system of allocation of expenses has been regularly followed by the Appellant. Further, it cannot be concluded based on this analysis of details that deduction has been allowed of an amount to the Appellant, to which it is not entitled - i.e. no excess deduction in respect of unit at Jammu (eligible @ 100% of profits) and with regard to Silvassa Unit which is entitled to deduction @ 30% of the profits has been allowed. The undersigned, therefore, accepts the contention of the Appellant that the scientific method of allocation of expenses has been adopted by the Appellant in allocating various, indirect head office expenses and further the same is being followed consistently on a year-on-year basis. Accordingly, the AO is directed to re-compute the eligible deduction available under section 80-IB from Jammu unit to the Appellant." 13.3 Aggrieved with the original order of Ld. CIT(A), the assessee had preferred an appeal on this ground, which is not being pressed in view of the rectification order pas....